How might a member of an LLP transfer or assign their partnership interest to a new member?

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Published on LexisPSL on 19/08/2016

The following Corporate Q&A provides comprehensive and up to date legal information covering:

  • How might a member of an LLP transfer or assign their partnership interest to a new member?
  • Transfer of interest in LLP by deed
  • Assignment of interest in LLP
  • Company secretarial matters

Transfer of interest in LLP by deed

A limited liability partnership (LLP) does not have directors, shareholders or partners, it has members. The members of an LLP are the persons who have subscribed their names to the incorporation document or as otherwise appointed in accordance with an agreement between themselves.

The legislation in relation to the transfer or assignment of an interest in an LLP is not as comprehensive as that in relation to a company. It is therefore best practice for members to agree all aspects of the relationship between them by deed in a limited liability partnership agreement, including any provisions relating to retirement, or the transfer of their interest in the LLP (to the extent that a sale to a third party is allowed under the terms of the agreement).

Any existing partnership agreement should be examined for provisions setting out the procedure in relation to outgoing/incoming members. See Precedent: Limited liability partnership agreement—general and associated drafting notes for further understanding in this area. The Precedent includes a number of clauses dealing with expulsion, retirement and outgoing/incoming members.

In the absence of, or in addition to, a partnership agreement, a form of deed of retirement (by the outgoing member) and/or deed of adherence (by any incoming member) will likely be required to effectively handle the transfer of the partnership interest.

As noted above, it may be

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